Section 65 of the Contract Act applies to a void contract, and the person receiving benefits under such a contract is bound to restore them or make compensation.

( 1 ) THIS appeal hag been instituted by the defendants against whom a suit has been filed by the municipal Board, Rath for the recovery of a sum of money on the basis of the contract which was given to the defendant in a public auction for the recovery of Tehbazari. The contract admittedly was taken by the defendants for Rs. 37,800/- but they did not pay part of the contracted money for the recovery of which this suit has been filed.

( 2 ) THE defendants contested the suit and apart from other pleas they contended that the contract in their favour was invalid and could not be enforced by the plaintiff. The contract was invalid as the same was not registered. Apart from this, the defendants also contended that due to certain lapses on the part of the plaintiff a loss of Rs. 5,500/- was caused to the defendant and for this reason the plaintiff was not entitled to claim- any amount. The suit was decreed by the trial court and the appeal by the defendants also met the same fate in the lower appellate court. Hence, the defendants have come up before this Court in second appeal.

( 3 ) A short point has been taken before this Court and it was to the effect that there was no valid contract between the parties as required under Section 97 of the Municipalties Act. The plaintiff, therefore, was not entitled to enforce the said contract and the lower courts had erred in granting the relief to the plaintiff under Section 66 of the Contract Act.

( 4 ) THE finding of the trial court was that there was no contract in writing duly signed by the authorised officer of the Board nor the document was duly registered and, therefore, it was not enforceable in law. The lower appellate court also found that the document required registration but in fact had not been registered and was, therefore, not enforceable. Both the courts below have decreed the suit relying on Section 65 of the Indian Contract Act which reads as under:

"when an agreement is discovered to be void, or when the contract becomes void, any person who has received any advantage under such agreement or the contract is bound to restore it, or to make compensation for it, to the person from whom he received it. "

Before Section 65 of the Act would be applied in a given case it must be established that there was an agreement which was discovered to be void or a contract which becomes void later on. In the instant case, there was no agreement at all according to the learned counsel for the appellants. This position, however, does not appear to be correct. In this case, an auction took place on 29-2-1960 and the defendants were the highest bidders. Therefore, the Theka was given to them. This Theka was later on accepted by the Board vide its resolution No. 59 dated 4-4-1960. Defendant No. 1 began to collect Tahba-zari dues from 1-4-1960, Now the question is as to whether the acceptance of the bids followed by the resolution of the Board would or would not amount to an acceptance of the proposal made by the appellants. In these cases the general notification made by the Board announcing the public auction of the rights of Tahbazari would be deemed to be an invitation to make offers. The bids at the auction were in fact in the nature of offers given by the various rival contenders and after the bid was knocked down in favour of the defendants as being the highest the same was accepted by the Board and later on confirmed by means of the resolution dated 1-4-1960. It would be deemed in these circumstances that the proposal or the offer made by the defendants had been accepted by the Board. This would constitute an agreement within the meaning of Section 2 of the Indian Contract Act According to section 10 of the Act, however, all agreements are contracts, if they are made with the free consent of the parties, who are competent to contract and the contract is for a lawful consideration and for any lawful purpose or have not been declared to be void under any Act. In order that